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The United States Mint officially concluded production of the circulating one-cent coin on November 12, 2025, a major moment in American monetary history that brought to a close a continuous manufacturing run spanning more than two centuries.
While the penny remains legal tender and an estimated 300 billion coins continue to technically circulate, the cessation of minting new pennies represents a fundamental shift in federal fiscal policy.
The decision was driven by a complex convergence of factors: catastrophic production economics, environmental concerns, industrial lobbying dynamics, and the rapid digitization of the consumer economy.
The Economics: When a Penny Costs Four Cents
The primary driver for eliminating the penny was the catastrophic inversion of seigniorage—the profit margin usually generated by issuing currency. Historically, the production of coinage was a revenue generator for the Treasury. The face value of the coin exceeded the cost of the metal and labor required to create it, and the difference (seigniorage) was transferred to the Treasury General Fund to help finance the national debt.
For the penny, this dynamic had been inverted for nearly two decades, transforming the coin from a fiscal asset into a significant taxpayer liability.
The Rising Cost
By Fiscal Year 2024, the unit cost to produce, administer, and distribute a single one-cent coin had risen to approximately 3.69 cents, nearly four times its face value.
This dramatic escalation was the result of a long-term trend in commodity markets and manufacturing overhead. A decade prior, the cost hovered around 1.42 cents, but relentless increases in the global spot prices of zinc and copper, combined with rising energy and transportation costs, made the penny financially indefensible.
The composition of the modern penny, 97.5% zinc plated with 2.5% copper, was originally adopted in 1982 specifically to reduce costs when the previous 95% copper composition became too expensive. Yet by the mid-2020s, even this “cheaper” zinc alloy had become prohibitively expensive.
In 2024 alone, the Mint produced approximately 3.2 billion pennies, incurring a direct seigniorage loss of $85.3 million. When viewed over a slightly longer timeline, the cumulative loss becomes even more staggering. In 2023, the Mint lost nearly $179 million on penny production due to higher volumes and metal prices.
The Circulation Problem
Beyond the direct accounting losses, the penny suffered from a collapse in its “velocity,” the rate at which money changes hands in an economy. In a healthy currency system, coins circulate repeatedly.
However, Federal Reserve data and independent economic analyses indicated that the penny had effectively ceased to function as a medium of exchange. Instead of circulating, pennies acted as a “one-way” currency: minted, distributed to banks, handed to consumers as change, and then immediately removed from circulation by accumulating in jars, drawers, or waste bins.
Despite an estimated 300 billion pennies existing within the U.S. economy, roughly 900 pennies for every man, woman, and child, banks and retailers faced perpetual “shortages” because the coins were not being re-spent. This hoarding behavior forced the Mint to continuously produce billions of new coins annually simply to replenish the supply of a denomination that consumers largely refused to use.
President Donald Trump, in his directive to halt production, seized upon this inefficiency, characterizing the continuous minting of a coin that cost nearly four cents to create but was worth only one cent as “wasteful” and “obsolete” in the modern era.
The Zinc Industry’s Last Stand
While the economic case against the penny was clear for years, its survival was artificially prolonged by a powerful industrial lobby centered in a single county in Tennessee. The production of the penny relied on a dedicated supply chain that acted as a massive federal subsidy for the domestic zinc industry.
The Artazn Monopoly
The United States Mint did not manufacture the zinc blanks (planchets) used for pennies in-house. Instead, it procured them through a lucrative, sole-source contract with Artazn (formerly Jarden Zinc Products), a company based in Tusculum, Greene County, Tennessee.
Artazn was the only supplier capable of meeting the Mint’s demand for copper-plated zinc blanks, a monopoly that made the company’s fortunes inextricably linked to the survival of the one-cent coin.
The manufacturing process at Artazn involved melting silver bars of zinc, rolling them into sheets of precise thickness, stamping out button-sized discs, and electroplating them with copper. This facility processed massive quantities of metal, supplying the 300 billion coins circulating in the U.S. and also blanks for over 20 other countries.
The reliance of the U.S. Mint on this single supplier created a symbiotic but fragile relationship: the Mint needed Artazn to fulfill its congressional mandate to produce coins, and Artazn needed the Mint’s orders to sustain its workforce of over 330 employees.
The Lobbying Campaign
To protect this revenue stream, Artazn and its parent companies funded a specialized interest group known as Americans for Common Cents (ACC).
Established in 1990, the ACC operated as a classic industry front group, disseminating studies and press releases arguing that eliminating the penny would harm consumers and charities. The ACC’s primary narrative was the fear of a “rounding tax,” the theory that without pennies, retailers would systematically round prices up, fueling inflation.
This lobbying effort was highly effective in stalling legislative reform. By framing the penny as a protector of the working class and a boon for charities, the zinc lobby successfully prevented the passage of anti-penny bills in Congress for decades.
The geographical concentration of the industry in Greene County, a district with strong Republican political alignment (carrying 82% of the vote for the Trump-Vance ticket in 2024), created intense local political pressure to maintain the status quo. Local officials publicly campaigned to “save the penny” purely on the grounds of preserving local manufacturing jobs, framing the executive order as a direct attack on the regional economy.
The Fallout
The cessation of penny production in late 2025 had immediate repercussions for Artazn. With its primary federal contract terminated, the facility faced an existential crisis.
WARN (Worker Adjustment and Retraining Notification) notices filed in Tennessee in late 2025 indicated impending layoffs, signaling the end of the “zinc subsidy” that had sustained the local industrial base for fifty years. The firm, owned by a Los Angeles-based private equity firm since 2019, faced the challenge of pivoting its zinc product lines to other industries, such as automotive or architectural zinc, to survive the loss of the Mint’s business.
The Legal Architecture
The halt of penny production was a complex interplay of executive power and legislative maneuvering. Unlike previous coin eliminations, which were strictly statutory, the 2025 cessation utilized a hybrid approach of executive suspension and proposed legislative codification.
Executive Authority
The legal foundation for President Trump’s order to stop minting pennies lies in the discretionary powers granted to the Secretary of the Treasury under 31 U.S.C. § 5112(a). This statute authorizes the Secretary to mint and issue coins “in such quantities as the Secretary determines to be necessary to meet the needs of the United States.”
Historically, Congress has used legislation to formally demonetize coins, such as the removal of the half-cent in 1857 or the $2.50 gold coin in 1930, stripping them of their status as legal tender or forbidding their production entirely.
However, in 2025, the administration bypassed the slow legislative process by leveraging the “necessity” clause. The Treasury Secretary determined that the existing inventory of 300 billion pennies was sufficient to meet national needs, thereby legally justifying a “suspension” of production without requiring an immediate Act of Congress to abolish the coin denomination itself.
This distinction is critical: the penny has not been demonetized. It remains legal tender for all debts, public and private. The government has simply chosen to stop adding to the supply, a move technically distinct from abolition but practically equivalent in terms of manufacturing.
The COINS Act
To solidify this executive action and prevent future administrations from reversing it, legislative allies introduced H.R. 1401, titled the “Currency Optimization, Innovation, and National Savings Act of 2025” (COINS Act).
Key provisions of the COINS Act included:
A 10-Year Suspension: Mandating a cessation of production for a decade, rather than a permanent ban, allowing for a re-evaluation of the currency landscape in the future.
Numismatic Exception: Allowing the Mint to continue producing proof and uncirculated pennies for collectors, ensuring that the historical legacy of the coin (and revenue from collector sets) continued.
Study Mandate: Requiring the Comptroller General to study the effects of the suspension on commerce and pricing.
While the executive order halted production effectively, the COINS Act represented the legislative branch’s attempt to assert control over the long-term structure of the currency, framing the move as a “temporary” suspension to mitigate political backlash while effectively ending the coin’s life as a circulating currency.
The Federal Reserve’s Role
The transition from a penny-rich to a penny-less economy required a massive logistical undertaking by the Federal Reserve and the banking sector. The unwinding of the penny supply chain was managed through a series of deliberate contractions in distribution services.
Terminal Closures
The Federal Reserve operates a network of approximately 165 coin distribution terminals nationwide. As production wound down in 2025, the Fed began systematically closing these terminals for penny services.
By November 2025, over 100 of these terminals had ceased penny operations, creating localized “droughts” of the coin even before the final strike.
To manage the dwindling inventory, the Federal Reserve and commercial banks instituted strict rationing protocols. For example, commercial change orders for pennies were capped at $25 per order in many regions, and availability was restricted solely to existing clients. This “soft landing” approach was designed to force retailers to begin adapting their point-of-sale systems to rounding protocols before the supply completely evaporated.
The Final Strike
The physical end of the penny’s production occurred on November 12, 2025, at the Philadelphia Mint. In a ceremonial event, U.S. Treasurer Brandon Beach struck the final circulating penny.
These final coins were not released into circulation but were set aside to be auctioned, transforming the last of the Lincoln cents into high-value collector’s items immediately upon their creation.
The Mint confirmed that while circulating production had ceased, it would continue to produce limited numbers of numismatic pennies for collector sets, maintaining the 232-year continuity of the series for historical purposes, albeit at a premium price point that guaranteed profitability.
How Rounding Works
The most visible impact of the penny’s elimination for the average American consumer is the implementation of cash transaction rounding. As the flow of new pennies stops, retailers have been forced to adopt new pricing and settlement protocols.
The Rounding System
With the penny removed, the nickel (5 cents) becomes the lowest denomination. The U.S. is adopting a system known as symmetric rounding (often called “Swedish rounding”), which applies only to cash transactions. Credit card, debit card, and mobile wallet payments continue to be settled to the exact cent.
The standard rounding algorithm creates a neutral outcome for both buyer and seller over time:
Round Down: Transaction totals ending in 1, 2, 6, or 7 cents are rounded down to the nearest nickel. (e.g., $10.02 becomes $10.00)
Round Up: Transaction totals ending in 3, 4, 8, or 9 cents are rounded up to the nearest nickel. (e.g., $10.03 becomes $10.05)
No Change: Totals ending in 0 or 5 remain unchanged
The “Rounding Tax” Myth
For decades, the zinc lobby (Americans for Common Cents) warned that rounding would result in a “rounding tax” where merchants would manipulate prices to ensure totals always rounded up, costing consumers millions. However, extensive empirical data refutes this.
A 2025 study by the Federal Reserve Bank of Richmond, utilizing data from the “2023 Diary of Consumer Payment Choice,” modeled the impact of this transition.
The study found that while transaction totals are slightly skewed toward digits that round up, the net cost to the entire U.S. consumer base would be approximately $6 million annually. When juxtaposed against the $85.3 million in tax dollars saved by stopping production, the elimination of the penny results in a substantial net welfare gain for the nation.
Because sales taxes are applied before the total is calculated, retailers cannot easily manipulate item prices to ensure a favorable rounding outcome, as the final post-tax total is difficult to predict with precision.
Retail Challenges
Despite the economic logic, the transition created significant operational friction. Retail trade associations like the National Association of Convenience Stores (NACS) and the Retail Industry Leaders Association (RILA) reported that thousands of stores faced penny shortages in late 2025 without clear federal guidance.
The lack of a unified federal statute preempting state laws created legal risks. In some states, consumer protection laws or “cash discrimination” statutes could theoretically be interpreted to make rounding up illegal, exposing retailers to class-action lawsuits.
Additionally, the interaction between rounding and state sales tax collections created complexity. Retailers urgently lobbied Congress to pass the “Common Cents Act” or similar provisions to provide a federal safe harbor for rounding practices, ensuring that a merchant could not be sued for rounding a $1.03 purchase to $1.05.
The Environmental Case
While the financial arguments focused on seigniorage, the environmental argument against the penny was equally damaging. A full lifecycle assessment of the penny revealed that its production was an ecologically destructive process that generated pollution disproportionate to the coin’s utility.
Mining and Extraction
The reliance on zinc as the primary substrate for the penny linked the currency directly to the environmental impacts of the mining industry. The Red Dog Mine in Alaska, a primary source of U.S. zinc, has been identified by the EPA as one of the country’s largest sources of toxic releases, specifically regarding heavy metal tailings. The smelting and refining of zinc release sulfur dioxide and other industrial pollutants into the atmosphere.
The logistical chain of the penny was carbon-intensive. The heavy metal blanks were transported from Tennessee to mints in Philadelphia and Denver, stamped, and then shipped via armored heavy trucks to thousands of banks across the continent. It is estimated that over a 35-year period, the distribution of pennies alone generated over 107 million pounds of CO2 emissions.
The Single-Use Problem
The environmental inefficiency of the penny was exacerbated by its usage pattern. Unlike a quarter or a twenty-dollar bill, which circulates for decades, the penny had effectively become a “single-use” item, minted, transported, and then immediately discarded into a jar or landfill.
This “mint-to-landfill” pipeline meant that the energy and pollution embedded in the coin’s production yielded almost no economic utility.
While the shift to digital payments involves energy consumption via data centers, the elimination of the physical manufacturing and transport of billions of metal discs represents a clear reduction in heavy industrial pollution and resource depletion. The cessation of penny production is a significant environmental sustainability measure, eliminating a process that consumed vast amounts of energy to produce a product that consumers overwhelmingly treated as waste.
Impact on Charities
A significant cultural resistance to eliminating the penny came from the charitable sector, which historically relied on “penny drives” and collection canisters to raise funds.
The Shift in Giving
Organizations like the Leukemia & Lymphoma Society (LLS) historically raised millions through school-based penny collection campaigns. The fear was that removing the physical token of the penny would destroy this micro-donation ecosystem.
However, the sector had already begun pivoting long before the 2025 cessation. Evidence from Canada’s transition in 2013 showed that while physical coin collections declined, they were replaced by more efficient point-of-sale mechanisms.
“Rounding up” at the digital checkout proved to be far more lucrative than physical coin collection, which required volunteers to collect, clean, count, and roll heavy coins—a process that often consumed a significant portion of the donations in administrative overhead.
Adaptation
In response to the changing landscape and broader threats to federal funding, organizations like LLS (rebranding and expanding efforts under the umbrella of “Blood Cancer United” in some contexts) secured major private philanthropic support, such as an $8 million gift from the Big Nova Foundation in late 2025, to bridge the gap during this transitional period.
The shift away from pennies is driving a modernization of charity, moving from inefficient physical collections to seamless digital integration.
Interestingly, Australia offered a counter-example of innovation with its “Donation Dollar,” a legal tender $1 coin designed specifically to be given away, which includes a green center that wears away to reveal gold ripples. The U.S., however, has chosen to abandon the low-denomination physical token entirely rather than reinvent it.
International Context
The United States was one of the last major economies to retain a one-cent coin, ignoring decades of successful precedents set by peer nations.
Canada’s Blueprint
Canada’s elimination of its penny in 2013 served as the primary blueprint for the U.S. strategy. Facing similar production cost issues (1.6 cents per coin), Canada ceased minting and successfully implemented symmetric rounding.
Post-transition studies by the Bank of Canada confirmed that there was no impact on inflation. Prices did not rise; the rounding washed out neutrally, and the removal of the coin saved the Canadian economy an estimated $11 million annually in direct costs, plus roughly $150 million in private sector handling costs (counting, rolling, transporting).
Global Trends
Australia & New Zealand: Both nations eliminated 1-cent and 2-cent coins in the early 1990s. New Zealand later eliminated its 5-cent coin in 2006 as inflation continued to erode purchasing power, a trajectory the U.S. may eventually follow.
Eurozone: Several EU nations, including Finland and the Netherlands, effectively eliminated the 1 and 2-euro cent coins by adopting mandatory rounding, although Germany retained them due to a cultural preference for “precise pricing.”
The U.S. delay in following these examples was not due to a lack of data but rather the unique strength of the zinc lobby and a specific cultural inertia regarding the penny’s historical symbolism.
What Comes Next
The death of the penny is likely the opening chapter in a broader restructuring of American currency. The economic arguments that destroyed the penny apply with even greater force to the nickel.
The Nickel Problem
The nickel (five cents) is in a more dire financial position than the penny was. The cost to produce a single nickel in 2024 was 13.78 cents, nearly three times its face value. While the total loss was lower than the penny’s due to lower volume, the unit economics are catastrophic.
However, eliminating the nickel presents a much steeper challenge: the “rounding gap.” If the nickel were removed, cash transactions would round to the nearest dime (10 cents). The Richmond Fed estimates this would explode the “rounding tax” on consumers from $6 million to $56 million annually.
Because prices often end in .99 or .95, rounding to the nearest ten cents would structurally favor merchants far more than rounding to the nickel does. Consequently, the nickel is likely to survive for the immediate future, despite its cost, unless the U.S. Mint can successfully deploy an alternative alloy (such as 80/20 cupronickel) to bring costs down.
The Digital Future
The elimination of the penny also aligns with the Trump administration’s broader goal to position the U.S. as the “crypto capital of the world.” The signing of the GENIUS Act (Guiding and Establishing National Innovation for US Stablecoins Act) in July 2025, alongside the “BITCOIN Act,” signals a decisive pivot toward digital assets and stablecoins as the future of settlement.
In this context, the retirement of the penny is a symbolic step away from analog, metal-based value transfer toward a digital-first future. As stablecoins and digital wallets reduce the friction of micropayments, the need for physical tokens to settle fractional value diminishes further. The penny, a relic of the 18th century, had no place in a 21st-century economy designed for blockchain speed and efficiency.
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